Safaricom has introduced an expiry date on its loyalty programme, popularly known as Bonga Points, in a bid to encourage redemption and unlock the underlying revenue that totalled Sh4.5 billion as of march this year.
The listed telco has told subscribers that all unredeemed Bonga points will now be expiring after three years, meaning that those accumulated before December 31, 2019, will expire effective January 1, 2023.
Safaricom termed the move to put an expiry date on the loyalty points a business decision aimed at encouraging redemption.
The outstanding value of the unclaimed points has doubled over the last seven years, from Sh2.2 billion in 2015 to Sh4.5 billion this year.
“Effective January 1, 2023, all Bonga points older than three years will expire and will be unavailable for redemption,” said Safaricom in updated terms and conditions for the loyalty programme.
“Your Bonga points will also expire immediately in the event that your line has been deleted as a result of inactivity and in accordance with the terms and conditions for the use of the Safaricom services.”
The loyalty points are recognized as a liability, or deferred income, in Safaricom’s books and are only booked as revenue upon redemption by customers either for airtime, SMS, merchandise or shopping.
The company also recognizes loyalty points on churned SIM cards as revenue.
Safaricom uses the same concept to recognize airtime revenue. Prepaid airtime sold to customers is held as deferred revenue until the customer uses it.
The loyalty scheme, introduced in January 2007, gives subscribers one Bonga point for every Sh10 spent on the Safaricom network on voice, mobile data and SMS, and for every Sh100 spent on the network for M-Pesa transactions.
Business customers also earn loyalty points when they achieve their sales targets and redeem the points at the completion of revenue contracts with Safaricom.
Airtime and talk time minutes bought using Bonga points expire after seven days, and are prioritised for usage ahead of charges from the main airtime account.
The telco awards four minutes of talk time for 50 Bonga points, graduating to 280 minutes for 4,000 points.
For those redeeming airtime, the redemption ratio ranges from Sh3 worth of airtime for 10 points, up to Sh600 worth of airtime for 2,000 points.
For SMS redemptions, the award ranges from 20 texts for 15 points, to 3,500 texts for 600 points, with expiry ranging from 24 hours to 30 days.
However, the valuation of Bonga points has not been consistent over the years, with the worth of each loyalty point varying depending on the merchandise or non-merchandise being redeemed.
In a bid to encourage wider redemption beyond the purchase of airtime, data, phones and accessories, the telco has been widening the range of goods and services that can be redeemed in exchange for Bonga points.
The points are now being redeemed for retail payments through the Lipa Na M-Pesa Buy Goods option, and for settlement of select bills through the Pay bill option. Subscribers can also redeem points for Kenya Airways tickets.
Last year, the telco also opened up an option to use the points to purchase shares at the NSE, offering Sh1 for every five loyalty points for investment purposes.
During the height of the Covid-pandemic, Safaricom allowed people to donate their points to those in need to buy goods and services, under a programme dubbed Bonga For Good.
By the end of the initiative that ran between April and June 2020, more than 600,000 customers redeemed more than one billion Bonga points through donations that were pegged at 30 cents per point, equating to Sh330 million at over 40,000 Lipa Na M-Pesa merchants across the country.
This came in a period when restrictions imposed to limit the spread of the coronavirus disease saw businesses cut down their activities on reduced consumer demand, triggering layoffs, unpaid leaves and pay cuts.
The reduced cash flow shifted consumer spending and generated an appetite for non-monetary expenditures like the use of Bonga points.
Published on: Business Daily
Publication Date: 22/11/22